2 Blue-Chip Dividend Stocks Ready to Climb

Bargains are coming. All you need is the patience to take advantage of them.

For now, start your shopping via defensive, dividend-rich issues.

Two good Anglo-Dutch dividend payers recently got taken down a peg: Royal Dutch Shell (NYSE:RDS.B[1]) and Unilever (NYSE:UN[2]). Both companies posted decent fourth-quarter earnings, but there were minor warts on both reports.

[3]Shell tallied a $278 million loss on its refining and marketing operations, somewhat more than the consensus was projecting. I’m not alarmed, though, because RDS is paring back its refining business — with its notoriously volatile profit margins — in favor of a greater commitment to exploration and production.

By 2017-2018, Shell hopes to boost its daily oil-and-gas output to 4 million barrels of oil equivalent, about a 25% increase from 2011. Assuming the company comes anywhere close to that target, the stock should provide an annualized return in the low double digits for folks who buy the stock now.

The current yield, based on the new quarterly dividend rate (86 cents per share) is 4.7%.

[4]Unilever, one of the world’s largest makers of foods, soaps, and other household goods, chalked up a 4% gain in operating profits for the year — O.K., but nothing to shout about.

However, I’m encouraged that sales to emerging markets jumped 10.5% in 2011, almost triple the company’s growth rate in developed markets (Europe and North America). Over the next decade, I expect UL’s emerging-market outreach (now 43% of total sales) to trigger a renewed growth surge for the company. Current yield is 3.7%.

There’s no foreign withholding tax with either Royal Dutch Shell or Unilever as long as you buy the London-sourced shares, thus providing an even juicier after-tax return on both stocks.